I fully support the recommendations of the SEC Advisory Committee regarding limitations on SOX Section 404 to small and microcap public companies.

I am the CFO of such a company, with $8 million of revenue in 2005, and $4 million in 2004. We have four people in our accounting and financial reporting function. Over the past two years, our costs to comply with 404 were approximately $1.2 million for 2004 (equal to 100% of our annual gross margin) and about $0.8 million for 2005. This of course does not include the opportunity cost of 60 to 80 hour work weeks over three to five months consumed exclusively by this task at the expense of more meaningful contributions to the growth of our actual business. We do not have the financial luxury to simply add staff to absorb this enormous overkill.

While there has indeed been some accuracy benefit, there is no question in my mind that it has been enormously disproportionate to the cost. If this experiment was intentioned for the benefit of our shareholders, it has surely failed.

I have been a financial manager for more than thirty years. Over that time, I have always taken my responsibilities and my fiduciary duties very seriously, and I have placed the value of my integrity and credibility well above any short term gain (or the avoidance of a loss.) When I began my career, the emphasis was on the reasonable and consistent application of a limited number of basic, concept based accounting principles. Applying these eight principles with a healthy dose of integrity, in my judgment, produced a better result than has thousands of rules, which unsuccessfully attempt to contemplate every possible circumstance. This is not progress.

I am disgusted by those in my profession who have abused their duty, but the solution is not to punish the innocent and to erode the free market system that makes our economy the best in the world.

Rarely does “one size fit all.” Please consider that principle in your decision, and have the courage to do what is right rather than what is politically safe.